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In This Issue

ISO New England Says to Have Enough Power this Winter

New Report Details Pennsylvania Nuclear Plants’ Positive Impact on State Economy

Natural Gas and Oil Market Update

EIA - Weekly Natural Gas Storage Report

NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price


NOAA 6 to 10 Day Outlook
Color indicates the probability of forecasted temperatures being above or below a historical average for the period.


Market Overviews

ISO New England Says to Have Enough Power this Winter

Platts | December 9, 2016

Despite generation retirements and the possibility of fuel constraints for natural gas-fired generation, ISO New England should have plenty of generation capacity this winter, the independent system operator said Monday, and at least one industry observer concurred.

"As [the] ISO has noted, there is more than adequate capacity to meet reliability today and moving forward," said Dan Dolan, New England Power Generators Association president, in an email.

If New England has a normal winter with temperatures of about 7 degrees Fahrenheit, the ISO should have a peakload of about 21,340 MW, compared to an all-time winter peak of 22,818 MW on January 15, 2004, according to an ISO New England media statement.

To meet that demand, ISO New England has 31,101 MW of capacity committed in its Forward Capacity Auction for this period, and if all generation including that which did not clear in the FCA, total available capacity could reach 33,948 MW, the ISO said.

The National Weather Service's November 30 forecast calls for elevated chances of above-normal temperatures in New England in December, January and February. This past winter was relatively mild, with a peakload for the period of 19,545 MW on February 14.

This winter's reserve margin -- excess capacity as a percentage of expected peakload -- would be 45.7%, down from last winter's 47.4%, but up from 41.5% in the winter of 2014-15 and 40.1% in the winter of 40.1%.

Dolan noted that ISO New England's "competitive market as helped drive 2016 to the lowest wholesale electricity prices since at least 2003."

In an extreme situation, with temperatures of about 2 degrees F, ISO New England peakload could hit 22,028 MW, the ISO said.

Therefore, the ISO has implemented a Winter Reliability Program, which creates incentives for natural gas and oil-fired plants to procure sufficient fuel before winter begins, covering the months of December, January and February. This includes provisions for oil inventory, LNG and demand response, the ISO said.

However, in recognition of possible natural gas pipeline constraints, ISO New England acknowledged that 3,450 MW of that capacity is "at risk of not being able to get fuel when needed." About 14,850 MW of New England's generating capacity mainly uses natural gas as fuel.

The Algonquin Incremental Market Project's recent completion added 342,000 dekatherms of natural gas delivery, and Dolan said that because of this, "we expect to continue to see highly competitive pricing into the winter months."

As of November 29, the Platts M2M Forward Curve had the Mass Hub December on-peak package priced at $47.95/MWh, and as of December 2, Mass Hub January on-peak was priced at $76.15/MWh, and Mass Hub February on-peak was priced at $74.80/MWh.

In contrast, the actual day-ahead on-peak locational marginal prices for the Northeast Massachusetts-Boston area averaged $26.20/MWh in December 2015, $41.78/MWh in January 2016 and $32.94/MWh in February 2016.

But overall average temperatures may be mild while individual days may experience extremes, according to meteorologists, and on an extremely cold day, heating customers have priority for natural gas over power generation, ISO New England said.

"Despite planning for these anticipated risks, if the region experiences any combination of extreme cold for an extended time, power plant outages, and limitations on natural gas delivery, maintaining reliability could require the use of emergency procedures," said Vamsi Chadalavada, ISO New England executive vice president and chief operating officer, in a statement.

And he expressed more concern about the future.

"Beyond this winter, the situation will grow even more uncertain because non-gas power plants are retiring and being replaced primarily with new, gas-fired generation," Chadalavada said. "We are currently evaluating how the ISO will maintain reliability in the future under these conditions."

But Dolan expressed more confidence that the industry would meet demand as needed, given ISO New England's robust Forward Capacity Market and increasing efficiency among generators.

"In light of recent power generation retirement announcements, over 4,000 MW of new plants have cleared in recent Forward Capacity Auctions and are under construction or development today," Dolan said. "These plants are some of the most efficient and clean burning facilities in the country. The existing generation fleet doesn't lag far behind."

Since Massachusetts passed electricity restructuring in 1997, generation efficiency has increased nearly 25%, Dolan said.

"That means it today takes three plants to produce the energy it used to take four," Dolan said. "Intense competition has driven 2016's prices and the region's generation efficiency gains."

Read More:

New Report Details Pennsylvania Nuclear Plants’ Positive Impact on State Economy

Daily Energy Insider | December 9, 2016

Pennsylvania’s nuclear power plants have made a large impact on the state economy, contributing nearly $2 billion to Pennsylvania’s gross domestic product and accounting for about 16,000 full-time jobs, according to a new report from The Brattle Group.

A key part of Pennsylvania’s diverse energy mix, the state’s five nuclear plants also are critical to maintaining a reliable electric grid in the state. The state’s nuclear plants participate in the competitive electricity markets of the 13-state PJM grid, the largest wholesale electricity market in the world.

“This report once again confirms the advantages of using nuclear power – reliability and efficiency, as well as serving as an important economic driver for the Commonwealth,” the Chamber of Commerce for Greater Philadelphia President and CEO Rob Wonderling said.

“Diverse energy sources such as natural gas, coal, solar, wind and nuclear power enable Pennsylvania and the country to balance the cost of electricity and availability to our advantage,” Wonderling added.

The Brattle Group report estimates the positive impact the plants have on keeping electricity prices lower by about $788 million per year. It also notes that annual state and federal tax collections from the plants total more than $400 million.

The report also highlights the value of avoided pollutants at $260 million per year over the next 10 years, in addition to avoiding 37 million tons of CO2 emissions.

“Despite having one of the largest, productive, most energy-intensive economies of any state in the country, Pennsylvania is still able to produce more power than we need due to our diverse, competitive energy portfolio of nuclear, gas, coal and renewables,” PA Chamber President and CEO Gene Barr said. “Low energy costs lead to greater economic opportunities here and entice new investors to locate and expand in our Commonwealth.”

The Pennsylvania Chamber of Business and Industry, the Chamber of Commerce for Greater Philadelphia, the Allegheny Conference on Community Development and the Pennsylvania Statewide Building Trades Council jointly highlighted the report prepared by the economics firm.

Read More:

Natural Gas and Oil Market Update


Natural Gas Prices Up After Weekly Stockpile Data

The Wall Street Journal | December 9, 2016

Natural gas prices rose Thursday after federal data showed a draw from stockpiles that was in-line with expectations.

Futures for January delivery gained 9.2 cents, or 2.55% to settle at $3.695 a million British thermal units on the New York Mercantile Exchange.

Prices have rallied to the highest level since December 2014 as weather forecasts have shown below-average temperatures coming in across the country.
Natural gas is used to heat homes and sees a boost in prices when winter weather drives up demand for heating.


Oil Above $50 On Hopes For Non-Opec Output Cuts

Reuters | December 9, 2016

Oil rebounded from the week’s lows to close above $50 a barrel on Thursday, on growing optimism that non-OPEC producers might agree to cut output following a cartel agreement to limit production.

Both Brent and U.S. benchmarks rallied after the former secretary general of the Organization of the Petroleum Exporting Countries made comments supportive of nonmember

production cuts. The benchmarks remain more than $1 below the highs reached Dec. 5 in the wake of the OPEC deal.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Working gas in storage was 3,953 Bcf as of Friday, December 2, 2016, according to EIA estimates. This represents a net decline of 42 Bcf from the previous week. Stocks were 51 Bcf higher than last year at this time and 254 Bcf above the five-year average of 3,699 Bcf. At 3,953 Bcf, total working gas is above the five-year historical range.

NYMEX Natural Gas Week-to-Week Price Change NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price ($ per mmBtu)

NYMEX Natural Gas Week-to-Week Price Change - Five Yearly Snapshot

Disclaimer: The information contained in these reports is gathered from public and/or internal sources and is presented solely for the convenience of our customers and Newsletter Subscribers. Patriot Energy Group makes no representation or warranty, express or implied as to the accuracy or completeness of the information set forth in this newsletter, and Patriot Energy shall not have any liability to any person or entity resulting from use of this information in any way.
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